When is a BESS installation not the right solution?

An industrial BESS installation can form part of modern energy management when a company's consumption, tariff category, and grid connection create a clear economic incentive. In some cases, the technology can be used to store electricity when it is cheaper or more appropriate under the specific tariff structure. Industrial battery storage is not a universal solution for every business. In some cases, the investment will not match the operational benefits.

This article walks through the technical, legal, and economic situations where a BESS installation may be less suitable. The aim is to give a clear basis for assessing whether BESS is relevant in a concrete business situation.

Grid connection and weak price signals

The primary economic driver for a BESS installation is flexibility. The system creates value by shifting consumption away from the times when the electricity grid is most heavily loaded. If the company's grid connection and tariff structure do not reward that flexibility, a large part of the business case disappears.

Low voltage and limited price signals: Low-voltage customers can, in some grid areas, have less clear time- and capacity-based incentives than customers on medium voltage, according to Energinet's tariff catalogue 2026 (Energinet is Denmark's national transmission system operator). That does not mean BESS is never relevant on low voltage, but that the value in the specific tariff must be assessed from the customer's grid level, tariff category, and load profile.

No capacity charge: Energinet's tariff catalogue 2026 and the related consultation material on capacity charges for system users connected at 10 kV or above indicate that, in some cases, there can be a more direct price signal for high peak draws. It is still necessary to read the material together with the specific customer's tariff and grid situation. Where the signal is weak or unclear, the battery's economic value typically becomes more local and more uncertain.

Few operating hours and limited grid access: Some facilities have very low annual consumption or operate under special terms. For example, facilities with fewer than 500 full-load hours per year may, under the proposed method for limited grid access for consumption facilities, receive terms on interruptibility. That is a narrow method for the specific grid type, not a general indicator of whether a BESS installation is suitable. In such scenarios, where operations are already sporadic or can be interrupted without major consequences, storage will typically have more limited value.

Property ownership and lease contracts

An industrial BESS installation requires physical space and integration with the building's existing electrical infrastructure. That makes ownership of the building an important factor.

Limited rights in leased premises: If the company rents its premises, the process becomes considerably more complex. Under the Danish Commercial Tenancy Act (Erhvervslejeloven), the tenant may not, as a starting point, make changes to the leased property without the landlord's consent. That means physical changes and adaptations to installations normally require a prior agreement with the landlord, but the concrete terms also depend on the lease contract and any separate installation permits.

Risk of reinstatement: Even if the landlord grants permission, the lease may include requirements to reinstate the premises on departure. If a BESS installation must later be removed, costs can arise for dismantling and restoring relevant installations, and those should be included in the overall economics. If the company does not own the property, the project therefore becomes both a legal negotiation and a practical installation task.

Time horizon and investment profile

Industrial battery storage is a long-term infrastructure investment. Although the payback period can be attractive under the right assumptions, it requires a degree of stability in the company's plans for the future.

Short-term leases: If the company expects to move to new premises within a shorter period, it can be difficult to recover the investment in a stationary battery system. If a BESS installation must be relocated, costs can arise for dismantling, transport, a possible new grid connection, and renewed configuration at the new location.

Unclear future energy demand: If production faces a major reorganisation where future electricity consumption is unknown, it is difficult to size a battery correctly. A system sized to handle peak load for a specific set of machines loses effectiveness if that equipment is replaced with machinery that has a completely different consumption profile.

When solar PV and a grid upgrade are better options

It is important to distinguish between a need for more energy and a need for flexibility. A battery does not produce electricity. It only moves electricity in time.

Need for local generation: If the company's primary challenge is to reduce total energy purchases from the grid, local generation can be a relevant first path. Solar PV can be one possible solution, depending on the company's roof area and consumption pattern. It does require clarification of building and planning requirements, because solar PV installations may require a building permit depending on location, size, and surroundings. Once generation is in place that creates surplus electricity at certain times of day, it becomes relevant to look at storage.

Capacity shortage without flexibility: If a company wants to expand production, but the local grid connection cannot deliver the required power, a battery can in some cases act as a buffer. If the new equipment runs at a high and continuous load, the battery's contribution can be limited depending on the load profile. In such cases, an upgrade of the grid connection can be relevant to explore with the distribution system operator, but it depends on local grid capacity, the facility's operating profile, and the time horizon the company is working with. Research indicates that behind-the-meter storage is primarily used for peak shaving, resilient operation, and on-site energy management, and not as a substitute for a permanently undersized grid connection.

A straightforward guide: 5 questions before the conversation

To save time and align expectations, it helps to clarify a number of basic conditions internally in the company. The following five questions give a clear picture of whether industrial battery storage is a relevant path to pursue.

1. Do we own the building and the property? If the answer is no, the project requires close involvement of the landlord from day one. Without the landlord's acceptance of physical changes and a clear agreement on terms at departure, the project cannot be realised.

2. Is our grid connection at 10 kV or above? Larger electricity customers at medium-voltage level can, in some tariff proposals and tariff structures, be more closely linked to peak draws than low-voltage customers, according to Energinet's tariff catalogue 2026 and the related consultation material on capacity charges for system users connected at 10 kV or above. That is documentation of a possible tariff mechanism, not a guarantee that the individual customer has a strong price signal. At lower voltage levels, the value should be assessed concretely and locally.

3. Do we have a varying consumption pattern? A battery depends on variation. If the company's machines draw exactly the same amount of electricity 24 hours a day, there are no consumption peaks to shave, and there are no cheaper periods in which to charge the battery.

4. Is our time horizon long enough for the investment? Investment in a BESS installation is depreciated over a number of years. If the company expects to move, close the site, or change production fundamentally before the system can realistically deliver the expected value, the case should be reassessed.

5. Is our primary problem a lack of renewable electricity? If the goal is to reduce net demand from the grid, solar PV can be a relevant first step when roof area, operations, and economics fit. A battery does not reduce total energy consumption; it optimises when energy is drawn from the grid, which is the role for behind-the-meter storage that NREL describes.

Overall perspective

Industrial battery storage can be an effective tool for handling peak load, making use of fluctuating electricity prices, and optimising existing grid connections. But the technology requires the right framework conditions to work as intended. Without a tariff structure that gives a relevant flexibility signal, without the right property conditions, and without a varying consumption pattern, a BESS installation can be less suitable. A thorough, data-based assessment of the company's actual conditions is therefore the most important first step. Contact us here: https://zynexgroup.com/da/contact.